QUARTER 3 / WEEK 1 / LESSON 3

I. TOPIC

FORMS OF BUSINESS ORGANIZATION

II. INTRODUCTION

Traditionally, there are three major

forms of business organizations in the
Philippines recognized by law:
single/sole proprietorship, partnership,
and corporation. In recent years, a
fourth form of business organization
was included- the cooperative.

At present, the corporation is considered to be replete with

ethical issues. But even sole proprietorship and cooperatives
face various ethical dilemmas. The social responsibility oh
business is not only for the big corporations. We have
discussed in the previous lesson that business cannot be
reduced narrowly into the profit-motive. Thus, even if your
business is just small one, such as in sole proprietorship, you
are expected to seriously consider the ethical and social
aspects of your enterprise.
III. LESSON PROPER

A. MOTIVATION

Watch: Conversation: Why Become an Entrepreneur? (

Rappler )

https://www.rappler.com/brandrap/create-success/148864-
globe-mybusiness-conversation-smes.

B. DISCUSSION

Definition of Organization

An organization is a group of people who work together,

like a neighborhood association, a charity, a union, or a
corporation.

Forms of Business Organization

1. Single or Sole proprietorship – simplest form

of business organization, owned by one person.

Advantages :
• The most manageable and least expensive
form of business
• The owners have complete control over the
business and can make decisions based on his own
judgement
Disadvantages:
 unlimited liability – owner assumed all the debts of the
business.
 Difficult to obtain additional capital because of low
guarantee of profitable returns to lenders.

2. Partnership – association of two

or more person to carry on as a
co-owner of a business for profit.

Types of partnership

a. General partnership – partners

have unlimited liability for the debts
and obligations of the partnership.

b. Limited partnership – partnership

wherein one or more general partners have unlimited
liability and the limited partner have a liability that is only up
to the amount equal to their capital contribution.

Advantages:
 Has a wider capital base.
 Allows for diversification of the monetary contributed
monetary funds, skills, and resources.
 Expansion is easier

Disadvantages:
 Partners are jointly liable for all the obligations and
effects stemming from the decisions of the other
partner.
 Limited life because of its general instability.
3. Corporation – a separate body consisting of at least five
individuals treated by law as a unit. An Artificial being
created by operation of law, having the right of succession
and the powers, attributes and properties expressly
authorized by law or incident to its existence.

They are regulated by SEC (securities and Exchange

Commission), They had a minimum of five and maximum of
fifteen owners who are called shareholders.

Types of Corporation

a. Stock corporation – has capital stock divided into

shares and dividend
b. Non-stock corporation – does not issue shares of
stock and are established for public interest.

Modification of Corporate Forms of Business

A. Cooperatives – organization composed of individual or

small business that have banded together to reap the
benefits of a larger organization. Its main objective is to
make its members individually profitable or to save money.
B. Mutual Company – financial service firms owned by its
policy holders or depositors. Ex. Insurance company and
savings and loan association

Resources:

1. Business Ethics and Social Responsibility, Franz Giuseppe F Cortez, PhD ( Vibal )

2. https://www.youtube.com/watch?v=nzRi-I1MYHw
3. https://www.vocabulary.com/dictionary/organization
4. https://www.youtube.com/watch?v=7aYipxNeJCE
5. https://www.youtube.com/watch?v=7zRGxjZW8QU
6. https://www.youtube.com/watch?v=HmlgJBYx2vA